AEP Atlas Engineered Products Ltd

NANAIMO, BC, April 3, 2024 /CNW/ - Atlas Engineered Products ("AEP" or the "Company") (TSXV: AEP) (OTC Markets: APEUF) announced today it has made a principal debt prepayment of $1.08 million on its Business Development Bank of Canada ("BDC") loans.

The BDC loans were entered into February of 2019 to fund the South Central Building Systems ("South Central") acquisition in March of 2019. The first loan was secured by the land and building of South Central and was initially to be amortized over 256 months. The second loan was secured by the equipment of South Central and was initially to be amortized over 100 months.

These loans were recently generating interest at 7.8% and 9.3%, respectively. As a result of the debt prepayment, the Company has paid off its debt with BDC. These loans would have had an interest expense of $86,000 for the fiscal year 2024 if they had not been paid off. Excess cash on hand was used to prepay the BDC loans. It was determined by the Company that this was the best use of cash at this time as these loans would have reset at higher rates than the initial 5-year fixed interest rate, and the Company will still have access to debt and further cash on hand for potential future organic and acquisitive growth.

The Company has secured its first large wall panel order out of its Atlas Building Systems ("ABS") location in Nanaimo, BC and has already begun manufacturing and shipping for this project. This is a positive sign that pre-manufactured wall panels are becoming accepted in an area and industry where contractors traditionally stick-frame walls on site with framing crews. Pre-manufactured wall panels save a contractor from finding labour or framing crews in this difficult construction labour market and can save significant time and money on a build. The time and labour savings could help contractors build more homes more efficiently which would help alleviate Canada's housing shortage and complete their projects quicker and realize their profits sooner. ABS is looking forward to more projects in the future as the appeal and knowledge of pre-manufactured wall panels increases.

The Company has also experienced a 30% increase in quoting from January to February of this year indicating that construction activity and production is poised to grow for the last three quarters of the fiscal year after experiencing a more typical seasonal and cyclical slowdown recently compared to the previous few years. There continues to be a significant need for housing in Canada and management expects demand to increase with any lowering of interest rates.

AEP is a growth company that is acquiring and operating profitable, well-established operations in Canada's truss and engineered products industry. We have a well-defined and disciplined acquisition and operating growth strategy enabling us to scale aggressively and apply new technologies, giving us a unique opportunity to consolidate a fragmented industry of independent operators.

FORWARD LOOKING INFORMATION
Information set forth in this news release contains forward-looking statements. These statements reflect management's current estimates, beliefs, intentions and expectations; they are not guarantees of future performance. Although AEP believes that the expectations reflected in the forward looking statements are reasonable, there is no assurance that such expectations will prove to be correct, or that such future events will occur in the disclosed time frames or at all. AEP cautions that all forward looking statements are inherently uncertain and that actual performance may be affected by a number of material factors, many of which are beyond AEP's control. Such factors include, among other things: Risks and uncertainties relating to AEP, including those to be described in the Management's Discussion and Analysis ("MD&A") for AEP's three and nine months ended September 30, 2023. Accordingly, actual and future events, conditions and results may differ materially from the estimates, beliefs, intentions and expectations expressed or implied in the forward-looking information. Except as required under applicable securities legislation, AEP undertakes no obligation to publicly update or revise forward-looking information.

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SOURCE Atlas Engineered Products Ltd.